Economic illiteracy on oil prices; O'Reilly makes a fool of himself

(Photo by Cathy Cramer)Gas prices: If the Keystone pipeline went through, they'd go up in the center of the country and down along the coasts.

Whoever wrote the headline on this article has to be either a liberal tree-hugger or an economic illiterate.

The headline is "Why the Keystone pipeline would boost pump prices."

But when you read the article, it states that the real effect of building the pipeline from Canada to the Gulf Coast would be to eliminate a glut of oil in the central part of the country. Prices would rise there as the oil was sent to the coasts, where prices would drop.

The writer doesn't phrase it quite that way, however.

Instead he tries to find a way to cast a positive as a negative:

The proposed pipeline would relieve a glut of crude oil backing up in the Midwest and redirect those barrels to Gulf of Mexico ports. From there they could be shipped to world markets and repriced at higher global prices.

But that likely would mean higher prices for drivers in the nation's midsection, who currently are enjoying an unusual discount stemming from a lack of pipeline capacity.

This stuff about "world markets" is just radical environmentalist propaganda - unless of course you consider New Jersey part of the world market.

As I noted in this piece, we get substantial amounts of our gasoline from the Colonial Pipeline, which runs from Houston to Linden.

With the U.S. adopting a protectionist stance, and with gasoline prices in the U.S. lower than in other parts of the world, less overseas crude would be sent to American refineries. At the same time lower prices at home would constrict profits for domestic suppliers who would then scale back production (and lay off workers). The resulting decrease in supply would send prices right back up, potentially higher than before.

O'Reilly's idea is even dumber than that, though. Guess what countries receive the most gas from our refineries?

That's right: The same countries that are among our biggest sources of crude oil, Brazil, Mexico and Canada.

If we were to stop sending them gas, they'd stop sending us oil. And we'd both be screwed.

Congressional Democrats have actually introduced a bill to halt those exports.

So that should give you an idea of just how far O'Reilly has migrated from reality.